Monday, September 22, 2008

After reading comment after comment about this new "mother of all bailouts" proposal, it seems as if it's just another Bush administration attempt to destroy what's left of the soon to be mythical "middle class". It's just a multi-generational transfer of wealth from poor and middle class people to the financial elites (rich folks) - this after their greed trashed our financial system.

As opposed to 1907 when the banks saved the USA -- today, "We The People" will save the fat cats - by plunging ourselves into servitude.

By the way --- given how this "Conservative Government" has been nationalizing every damn financial institution in sight -- why can't they do the same with HEALTH CARE?

Monday, September 22, 2008

On Financial Executives' Compensation Packages

The Wall Street banksters want to keep the very large executive compensation packages. Remember the Lehman Brothers and how the firm disappeared last week? Do you know what happened to its executives? This:

Last week Barclays paid $1.75 billion to buy Lehman's North American investment banking and capital markets business. It emerged over the weekend that Barclays had agreed to pay $2.5 billion in bonuses to Lehman bankers in the United States in a move that has angered stricken staff in London.

Two and a half billion in bonuses, for the people who were running the firm when it exploded. Isn't that something? Did the secretaries and janitors get anything?

What is the rationale behind the financial executives needing as much money as some small countries have in their budgets?

The usual one is this: Really smart and clever financial managers are an incredibly rare talent. In fact, there are so few of them that all the firms are bidding for the same few individuals and the only way to get a really good executive is by buying him (it's almost always "him") for billions and billions. Otherwise the firms will end up having to hire some ordinary schmuck with just a few PhDs and a few decades' experience and that would never do.

This rationale has been employed for quite a while. So what did the industry get for the high executive compensation? The crashing market, it seems to me. IF this particular talent that created the crash really is so very rare we can all thank our chosen divinity for its rarity.

Many banks will fail - especially small and regional banks with excessive concentrations in construction & development (C&D) and commercial real estate (CRE) loans. And the recession is getting worse with rising unemployment, declining personal consumption expenditures, declining industrial production and falling business investment. Economies of many other countries are in or close to recession. The Fed even cautioned on slowing U.S. exports today for the first time.

Foreign stock markets are crashing: the Russian stock market was halted today after declining 17%. The Shanghai composite index is off about 2/3 from the peak.

The situation appears grim.

This crisis might have first become visible to Wall Street and the Federal Government in August 2007, but this crisis has been unavoidable for several years. If action had been taken in 2004 or 2005 to curtail the loose lending practices, the problem wouldn’t be so severe, but the crisis would have still occurred. The damage had already been done. Unfortunately the U.S. failed to prevent this crisis, and now we have no choice but to pay the price for the cleanup.

The good news is the U.S. is finally taking the necessary steps towards eventually resolving the crisis.

First, whether you agree or disagree with the FHFA and Treasury Secretary Paulson placing Fannie and Freddie in conservatorship, it has been obvious for some time that the U.S. Government had to explicitly guarantee the debt of Fannie and Freddie, or face a complete shutdown of the housing and mortgage markets. At least this guarantee was accomplished with the shareholders (both common and preferred) taking losses before the U.S. taxpayers. Since I have viewed a guarantee as inevitable, I consider this a necessary step toward the eventual resolution of the credit crisis.

Second, Secretary Paulson's no bailout approach to Lehman removes some moral hazard from the process. Although the fallout from Lehman's bankruptcy has just begun, this liquidation is probably a positive for the market. It appears this approach has already reaped some benefits with John Thain of Merrill Lynch calling Ken Lewis of BofA on Saturday morning to propose a buyout. Clearly Thain could read the writing on the NY Fed's wall.

BofA CEO Ken Lewis' self described "gamble" could fail, and BofA could find itself facing insolvency too. There are always risks in these situations.

It's true that the rescue tonight of A.I.G. suggests there are still moral hazard issues, but an A.I.G. collapse posed significant risks to the system, and the Fed was stuck with a dilemma and no good alternatives. I believe a collapse of A.I.G. would probably have been worse than the rescue.

Third, one of the reasons the credit crisis has lingered (in addition to house prices still being too high) is that a number of financial institutions have been unwilling to adequately mark down their assets. The reason for this reluctance is obvious as Lehman just discovered; too many write downs can lead to bankruptcy.

To Lehman's credit, they were getting close on their house price forecasts:

I think Lehman's new house price forecast is probably in the ballpark. Analyst Meredith Whitney thinks prices will fall over 40% from peak to trough (see video):

"The underlying root of all evil, if you will, has been U.S. house prices. ... The futures market indicates that a peak to trough house decline will be somewhere 33%. I think it will be well north of 40% to 45%."

No one knows for sure how far prices will fall, but based on fundamentals, we can be pretty sure there is still a ways to go. (For a discussion of Price-to-rent, price-to-income, and real prices see: Housing: It's about prices ... ). Until the institutions get realistic on their house price forecasts, the write downs - and the credit crisis - will continue.

In addition, the economic problems will exacerbate the credit problems for some time - probably all through 2009 as Ken Lewis noted yesterday:

[A]ll of next year will be a relatively tough time for the financial services industry. ... I don't see the clouds parting as I would like them to in 2009.

And Lewis is probably overly optimistic.

But progress is being made.

Along these same lines, here is what Brian Horey, President of Aurelian Managment, LLC wrote to his partners Monday night (posted with permission):

While it is unsettling to watch a major broker dealer such as Lehman be liquidated, I am viewing the events of the weekend as a constructive development in the process of reestablishing equilibrium in the capital markets. The most encouraging aspect is that the Fed and Treasury have finally recognized the futility of trying to prop up asset prices and removed the "Fed/Treasury put" ... from the marketplace. (note: written before the A.I.G. rescue)...This change in approach will hasten the processes of deleveraging, capital raising and asset price discovery which are needed to stabilize financial institutions and get capital flowing back into the sector again. A large number of investors sat on the sidelines throughout the crisis as financial institutions have been unwilling to come clean about the value of their assets. I expect the liquidation and repricing process that Lehman's bankruptcy will catalyze should help facilitate the recapitalization process.

But even the A.I.G. rescue will help with price discovery since it appears A.I.G. is required to sell certain assets as part of the deal.

Clearly we are closer to the eventual bottom today, than say in 2005 when very few people believed a housing bust and credit crunch were on the horizon. Unfortunately the bottom still isn’t in sight.

Horey concluded his letter with:

[W]e should not expect smooth sailing from here ... [however] I believe we have taken the first concrete steps toward putting in a bottom in the financial sector and that is the first glimmer of light of a recovery that I have seen since the mortgage market started to deteriorate two years ago.

"The first glimmer of light" written by an investor who has been correct on the credit crisis. Just a glimmer ...

There will be more grim news, perhaps for another year or more. And there is definitely some possibility of a systemic financial collapse (see Professor Roubini’s excellent discussion of the downside risks). But unlike observers that believe this only marks the end of the beginning, I believe there is a chance that these events mark the beginning of the end of the crisis.

Tuesday, September 16, 2008

Today the stock market tanked. Meanwhile, back in la-la-land, John Mc Same told us the "fundamentals are sound".

The financial markets are in "turmoil". Banks are foundering. Production is down. Unemployment is up. In addition, real estate still hasn't found a bottom.

Jobs are disappearing -- and the rest of the world is reeling, caused by the meltdown of the USA financial system.

One little side effevt of the Fannie, Freddie takeover is the fact that their preferred stock is now worthless. Most of it was held by BANKS -- who now have lost significant assets, taken a good hit to their balance sheets, just when they need those assets.

It's almost as if the Federales want to impose National Socialism by a necessary takeover of the banking and financial systems.

Another group we looked up to as "the smartest guys in the room" (where have I heard that before?).

It seems almost insane the so few were aware of the problems -- the mantra of "whocudanode" no longer flys.

As the economy melts down -- our peerless leaders don't even address the issues.

Thursday, September 11, 2008

O.K. -- we now have all this lipstick and pig talk, all of it being "spun" beyond belief by the McPalin forces. We have Santorum claiming that Palin is a feminist. Mr. Santorum seems to think he is also a supporter of women's rights.

There is so much untruthieness being spread by the McSame campaign that I can hardly bear to turn on the TV, read the inerwebnets, or even my e-mail.

It's the very same crap being repeated over and over -- with the very same rebuttals -- over and over.

I know who I'm voting for. I know the other side is a bunch of phoney right wing bigots -- I wish it were November.

Monday, September 8, 2008

So, the party of "fiscal restraint", of "responsibility" has led us to the brink of another "great depression" -- all this while being unwilling to admit we are in a recession.

It does appear that our gubbiment has cooked the books as a major strategy to both deny inflation, and "prove" there is no recession.

While we debatethe merits of a very inexperienced "Hockey Mom" for VP, our "free market"gubbiment has taken over both Freddie ans Fannie.

They will more or less save the foreign investors, while individuals will be virtually wiped out.

What we have is no longer Capitalism, and it's not Socialism -- I'll let smarter people to puzzle that one out.

It just seems we "deregulate" enough so the ever greedy Republicans can tank the economy - at least for the bulk of folks - then they try to blame everyone, and everything else - while trying to run against their own record.

If we elect one more Republican -- we deserve what we get.

As far as the economy goes ---- it ain't over yet, the hits will just keep on coming. If you really want a free market, you have to be willing to take the hits, go through the collapse. watch the people starve ---- and, after enough people die ---- it (the market) will self correct.

We once had a "mixed economy" -- seemed to work a hell of a lot better than this "unfettered Capitalism" crap.

"The Great Depression of 2006", "The Angry Bear", "Calculated Risk", "The Big Picture" are among the economics blogs it might do folks well to check out, also "The Conscience Of A Liberal" by Paul Krugman.

They will give you an "overview" of the real shape of our economy.

By the way, folks are beginning to call those foreign nations who hold our debt our "overlords" --- Is this really what you expected from a Republican Party who calls anyone who asks questions "traitors"? Did you really expect them to dismantle our gubbiment, while selling the nation to folks who were our enemies not that long ago?

Best believe they lined their own pockets while selling you all "down the river".

I'm an old woman. Born in 1939, I've seen, and reveled in the greatness of the USA. I've loved this nation, as I saw it moving to a "more perfect union". Those days are over. I truly fear for all you 40 and under out there. The truth is, I'm glad I'm not you.

Sunday, September 7, 2008

Let's say the list of books is incorrect -- so what? Isn't the operative idea that she actually attempted to ban books? If you look at it, the list is a good one. I bet many of the books listed were on her actual list -- if she was aware of them.

In addition, I'm happy to see that some Democrats are taking plays out of the late Lee Atwater's "playbook". For too many years our Republican brothers and sisters lie - and expect folks to believe them.

Saturday, September 6, 2008

Here's a list of books Our Pentacostal Palin tried to ban when Mayor of Wassilla:

"

Books Palin tried to ban

(This information is taken from the official minutes of the Wasilla Library Board).

A Clockwork Orange by Anthony BurgessA Wrinkle in Time by Madeleine L'EngleAnnie on My Mind by Nancy GardenAs I Lay Dying by William FaulknerBlubber by Judy BlumeBrave New World by Aldous HuxleyBridge to Terabithia by Katherine PatersonCanterbury Tales by ChaucerCarrie by Stephen KingCatch-22 by Joseph HellerChristine by Stephen KingConfessions by Jean-Jacques RousseauCujo by Stephen KingCurses, Hexes, and Spells by Daniel CohenDaddy's Roommate by Michael WillhoiteDay No Pigs Would Die by Robert PeckDeath of a Salesman by Arthur MillerDecameron by BoccaccioEast of Eden by John SteinbeckFallen Angels by Walter MyersFanny Hill (Memoirs of a Woman of Pleasure) by John ClelandFlowers For Algernon by Daniel KeyesForever by Judy BlumeGrendel by John Champlin GardnerHalloween ABC by Eve MerriamHarry Potter and the Sorcerer's Stone by J.K. RowlingHarry Potter and the Chamber of Secrets by J.K. RowlingHarry Potter and the Prizoner of Azkaban by J.K. RowlingHarry Potter and the Goblet of Fire by J.K. RowlingHave to Go by Robert MunschHeather Has Two Mommies by Leslea NewmanHow to Eat Fried Worms by Thomas RockwellHuckleberry Finn by Mark TwainI Know Why the Caged Bird Sings by Maya AngelouImpressions edited by Jack BoothIn the Night Kitchen by Maurice SendakIt's Okay if You Don't Love Me by Norma KleinJames and the Giant Peach by Roald DahlLady Chatterley's Lover by D.H. LawrenceLeaves of Grass by Walt WhitmanLittle Red Riding Hood by Jacob and Wilhelm GrimmLord of the Flies by William GoldingLove is One of the Choices by Norma KleinLysistrata by AristophanesMore Scary Stories in the Dark by Alvin SchwartzMy Brother Sam Is Dead by James Lincoln Collier and ChristopherCollierMy House by Nikki GiovanniMy Friend Flicka by Mary O'HaraNight Chills by Dean KoontzOf Mice and Men by John SteinbeckOn My Honor by Marion Dane BauerOne Day in The Life of Ivan Denisovich by Alexander SolzhenitsynOne Flew Over The Cuckoo's Nest by Ken KeseyOne Hundred Years of Solitude by Gabriel Garcia MarquezOrdinary People by Judith GuestOur Bodies, Ourselves by Boston Women's Health CollectivePrince of Tides by Pat ConroyRevolting Rhymes by Roald DahlScary Stories 3: More Tales to Chill Your Bones by Alvin SchwartzScary Stories in the Dark by Alvin SchwartzSeparate Peace by John KnowlesSilas Marner by George EliotSlaughterhouse- Five by Kurt Vonnegut, Jr.Tarzan of the Apes by Edgar Rice BurroughsThe Adventures of Huckleberry Finn by Mark TwainThe Adventures of Tom Sawyer by Mark TwainThe Bastard by John JakesThe Catcher in the Rye by J.D. SalingerThe Chocolate War by Robert CormierThe Color Purple by Alice WalkerThe Devil's Alternative by Frederick ForsythThe Figure in the Shadows by John BellairsThe Grapes of Wrath by John SteinbeckThe Great Gilly Hopkins by Katherine PatersonThe Handmaid's Tale by Margaret AtwoodThe Headless Cupid by Zilpha SnyderThe Learning Tree by Gordon ParksThe Living Bible by William C. BowerThe Merchant of Venice by William ShakespeareThe New Teenage Body Book by Kathy McCoy and Charles WibbelsmanThe Pigman by Paul ZindelThe Seduction of Peter S. by Lawrence SandersThe Shining by Stephen KingThe Witches by Roald DahlThe Witches of Worm by Zilpha SnyderThen Again, Maybe I Won't by Judy BlumeTo Kill A Mockingbird by Harper LeeTwelfth Night by William ShakespeareWebster's Ninth New Collegiate Dictionary by the Merriam-WebsterEditorial StaffWitches, Pumpkins, and Grinning Ghosts: The Story of the HalloweenSymbols by Edna Barth"

Good gosh, Holy Mackerel, Golly-Willikers, Wowie-Zowie, Rowrbazzle, and Holy Cow, have you recently read anything more insane (well, yes you have - but this is still up there).

This person wants to be second in command of a nation of over 350,000,000 DIFFERENT people?

This person ties everything to HER GOD - and wants to tie you to him/her/it also.

Phill Gramm says we are just "whiners". McCain says the economy has "sound fundamentals".

Isn't anyone else reminded of Rome and fiddles?

Freddie Mac and Fannie Mae are being taken over by the gubbiment -- where is all the "free market" talk now?

Management is being fired (according to many reports), stock is being "diluted" -- all this under the usual Republican mismanagrment. They rape the country, then expect Democrats to "make it all better, Mommy".

If anyone actually votes for MacSame and Pretty Pentocostal Palin -- (in the words of "Crazy Eddie") -- they've got to be INSANE!!

Tuesday, September 2, 2008

How about folks with high level press credentials being brutalized by the Police? Not just Amy Goodman and two of her co-workers, but also an AP cameraman and some guy who works for the N.Y. Post. The Post guy supposedly said, "For Gods sake, it's a Republican newspaper."

It seems a police riot is easy to find these days -- of course, all the violent right-wing rhetoric, calling for the elimination of dissent, the elimination of "traitors", might just have something to do with current attitudes toward free speech.

I did take a good look at the RNC ------ VERY WHITE! Most folks seemed to be more formal, in dress and attitude. Looked like a room full of BOSSES.

What do feisty soapbox orators, anti-lynching activists, bluestocking suffragists, labor agitators and birth control advocates have in common? Union Square. That was where, in the era of the 1911 Triangle shirtwaist factory fire, people with a cause gathered to add their voices to the public debate over the big political issues of the day. For two weeks in May, you can hear them again in a new production of Women's Voices from Union Square, an original musical play. Performances begin May Day (May 1) at the Tenement Museum Theater on Orchard Street in Lower Manhattan and continue there and at other venues in New York City through Mother's Day (May 12)"

In today's world, rabblerousers are not welcome. I guess they never were -- but for a while they were tolerated.

About Me

I'm just another old woman who has had wide ranging interests for a long time,
These include fishing, shooting, reading, cooking, and all manner of (mostly) left wing politics.
Born and bred in New York - Queens, to be precise - I now live in Texas, another state that folks seem to attack (like N.Y.) without ever having been here.
I'm also a fan of most sports -- esp. baseball, esp. the New York Yankees.
Originally a New York Giants (baseball) fan, I was crushed when they moved. It took many years wandering in the wilderness before I returned to baseball. I's all Wade Boggs fault. When I watched that artist, my love for baseball resurfaced. Since he was then a Yankee -- it had to be the Yankees.
The Mets pretended they had spiritual ties to the old Brooklyn Dodgers - no Giant fan could go there.
I tried - couldn't do it.